When lending to large companies

The advantage with such a credit rating upgrade and supports the popularity of the bank. Application of the method of diversification in the banking institution reveals the presence of highly qualified personnel, which has deep knowledge in many sectors of the economy, knows the specifics of the various geographical areas, has practical experience with various categories of borrowers. Establishing limits - is the establishment of maximum allowable size of loans, allows you to limit credit risk. Through the use of this method to the bank can avoid losses due to ill-considered critical concentration of any type of risk and to diversify the loan portfolio and provide a stable income. Limitation of authority is used to determine loan officers of different ranks on the size of loans. Credit risk is limited to establishing the bank limit the overall size of the loan portfolio, credit limit the bank's branches. The limits are defined as the maximum allowable size of a loan or credit lines, and are expressed as the absolute limit value (loan amount in monetary terms) and in relative terms (the coefficients of the indices, standards). For the base when calculating the amount of capital standards take a bank loan portfolio or balance sheet. In determining the credit limit should identify key areas and risk factors. An example of limitation may also be a standard NBU (according to the Law of Ukraine "On Banks and Banking Activity" [1] in order to protect clients' interests and ensure the financial soundness of the NBU sets for all commercial banks and economic standards. Category: Risks in Banking